DJ Natural Gas Prices Rise, Boosted by Hot, Stormy Weather
By Timothy Puko
Natural gas surged, posting some of its biggest daily gains of the year on Monday, as hot, stormy weather showed
signs of bringing an oversupplied market closer to balance.
Prices for the front-month July contract rose 13.9 cents, or 5.1%, to $2.889 a million British thermal units on the
New York Mercantile Exchange. Monday's gains are nearly large enough to cancel out back-to-back losses from the end of
last week.
Weather updates after the weekend showed hot temperatures holding on deep into June, increasing the possibility that
power plants will burn more gas to fuel air conditioners in large parts of the country. Forecasts are also showing
signs that a tropical storm may develop and cause flooding in Oklahoma and the Gulf Coast, which can disrupt gas
supplies in a region that is a hub for the industry.
Several traders and analysts dismissed the rally as overdone, saying the market was overreacting to weather that
ultimately wouldn't matter much. Above-normal temperatures outside the depths of summer often aren't hot enough to
cause a major spike in demand for cooling and gas-fired power. And storms in the Gulf Coast aren't nearly as big a
threat to supplies as they used to be now that shale drilling has moved the most critical gas fields north and on
shore.
But the market can be jumpy at this time of year when a long, hot summer still lies ahead, traders and analysts said.
Many have been expecting the weather phenomenon known as El Nino to bring cool weather and soft demand for gas-fired
power this summer, said Matt Rogers of Commodity Weather Group LLC in Bethesda, Md. Because that hasn't started yet,
traders are rethinking their bets as this June gets on track to be one of the hottest in the last 15 years, he said.
"The longer that (holds), the more folks are going to start thinking maybe this will be a hot summer afterwards," Mr.
Rogers added. "We don't believe that, but I certainly understand the mindset."
In dismissing Monday's gains, traders pointed to near-record production that had the market oversupplied by more than
3 billion cubic feet a day as recently as two weeks ago, according to analysts' estimates. Todd Gross, chief investment
officer at QERI LLC, predicted prices would fall back to $2.40/mmBtu by July 4. "Storm...some heat, but nothing to
write home about," Mr. Gross said in an email. The market "still isn't close to being balanced."
FUTURES SETTLEMENT NET CHANGE
Nymex July $2.889 +13.9c
Nymex August $2.912 +13.6c
Nymex September $2.925 +13.3c
CASH HUB RANGE PREVIOUS SESSION
El Paso Perm $2.68-$2.75 $2.54-$2.60
El Paso SJ $2.69-$2.73 $2.55-$2.60
Henry Hub $2.81-$2.93 $2.735-$2.8475
Katy $2.80-$2.86 $2.70-$2.76
SoCal $2.83-$2.92 $2.69-$2.735
Tex East M3 $1.62-$1.84 $1.46-$1.63
Transco 65 $2.84-$2.91 $2.735-$2.85
Transco Z6 $2.98-$3.04 $2.64-$2.97
Waha $2.73-$2.75 $2.64-$2.70
--Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 15, 2015 15:01 ET (19:01 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
061515 19:01 -- GMT
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